Burlington Resources Inc. of Houston, and Poco Petroleums Ltd. of Calgary have agreed to combine their businesses through BR's acquiring all common shares of Poco. The US$2.5 billion (C$3.7 billion) transaction will enhance BR's position as the leading independent exploration and production company. Under the terms of the definitive agreement, Poco shareholders will receive BR common equivalent shares ("Exchangeable Shares") based on a fixed exchange ratio of 0.250 Exchangeable Shares for each Poco share held. Based on BR's closing stock price on Monday, August 16, the exchange ratio represents an implied price of approximately C$16.78 (US$11.33) per Poco share. Given the 157 million Poco shares on a fully diluted basis, and the assumption by BR of approximately US$750 million (C$1.1 billion) of Poco debt, the transaction has a total value of approximately US$2.5 billion (C$3.7 billion). The agreement was unanimously approved by the Boards of Directors of both companies, and the directors and officers of Poco have agreed to vote their shares in favor of the transaction. The parties expect to complete the transaction by year-end.
The combined company will be the fourth-largest natural gas producer in
North America and the largest among independent E&P companies. Stated on a
basis consistent with BR's current reporting practices, the two companies on a combined basis had total worldwide reserves of 9.9 trillion cubic feet equivalent as of December 31, 1998. Poco Petroleums Ltd. is a top independent oil and gas exploration and development company operating in Western Canada. Poco pursues high impact, deep natural gas exploration in its Northern Region and liquids-rich natural gas in its Western Region. The smaller Eastern Region is in harvest mode. Burlington Resources is engaged in exploring for, developing, producing and marketing oil and gas. The Company conducts activities in several strategic areas, domestically and internationally, including the San Juan Basin of New Mexico, the Mid Continent area of the United States, including the Rocky Mountains, the deepwater province of the Gulf of Mexico, the East Irish Sea, the North Sea, North Africa and Latin America. BR ranks first among U.S. independent oil and gas companies in terms of proved U.S. reserves.